This document summarizes the savings that can be achieved through web-based self-service solutions for customer service. It discusses that self-service reduces support costs from $33 per phone call to just $1 per online transaction. It also notes that according to a study, 86.9% of customer inquiries were handled through self-service without needing more expensive support options. The document concludes that factors like reducing phone/email volume and lower professional services fees can help companies achieve a strong return on investment from customer relationship management software that incorporates self-service options.

1. The Savings of Web-Based Self-Service
Delighting Your Customers While Reducing Support Costs
by Susan Carstensen, CFO, RightNow Technologies
© 2001 RightNow Technologies

2. Contents
Executive Summary .........................................................................1
Customer Service: At What Cost? .....................................................2
From a Tight Spot to a Sweet Spot ....................................................2
Self-Service Index Documents Results ...............................................3
Get More R for Your I .......................................................................4
Conclusion ......................................................................................5
About the Author .............................................................................6
About RightNow Technologies ...........................................................6
© 2001 RightNow Technologies, Inc.

3. Executive Summary
Even in the best of financial times, obtaining a return on investment (ROI) on
a customer relations management (CRM) initiative frequently falls short of
expectations. Lengthy implementations, high professional service and
consulting fees, and cumbersome integrations contribute to many
unsuccessful CRM initiatives never proving their ROI. Evolutionary in
application, leading eService solutions are dedicated to exceeding customer
expectations for access to meaningful, accurate data and easy-to-navigate
Web sites, while reducing costs. And this multiplier effect - exceeding
customer expectations while reducing costs - makes the ROI of eService
applications impressive. Loyalty and satisfaction depend more than ever on
the quality of experience associated with goods and services. And a little
loyalty goes a long way, considering that even a five percent customer
retention rate may increase profits by 25 to 95 percent. (Reicheld and
Schefter, Harvard Business Review, July - August 2000). Customers most
assuredly notice if a company is providing:
24/7 Customer Service: No matter where the customer is logging on
from or what time of day it is, they can conduct their business or make
inquiries on their terms.
Immediate Satisfaction: Time is more important than ever to
customers, yet, according to a study by Jupiter Communications, a leading
eCommerce analysis firm, 42 percent of top Internet companies took longer
than five days to reply to email requests or never replied at all. Customers
are reluctant to try again if they are disappointed by slow response.
Clear Escalation Paths: Although 70 to 90 percent of inquiries can be
accommodated via an accessible knowledgebase, some questions require
special attention. Unique issues are rapidly and efficiently addressed through
email or live chat.
Accurate, Up-to-the-Minute Information: Precise information is often
dynamic and must be continually updated. Leading CRM packages include
knowledgebase applications that are self-contained and self-learning.
Customers shape the knowledgebase by determining what is most relevant
to them. The most useful, timely information becomes the most easily
accessible.
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© 2001 RightNow Technologies, Inc.

4. Customer Service: At What Cost?
According to IDC Worldwide, companies are expected to spend an estimated
$90 billion on CRM initiatives in 2003, more than twice as much as was spent
in 1999. Analysts see this astonishing growth as a clear indication that
businesses are eager to be proactive about customer retention and
relationship management.
"The bad news is that today's demanding business and consumer customers
can shoot your company down faster than ever before," says Patricia Seybold
in her new book, The Customer Service Revolution.
The good news is that software tools are available to help firms compete
aggressively for the hearts and minds of customers. But the solution must
install quickly, pay for itself in a short amount of time, and show tangible
bottom-line results.
Understandably, business leaders are wary of eBusiness technologies
claiming to improve the bottom line. Costly mistakes are frequently made
when choosing eBusiness software. Even when a product looks valuable, long
implementation times, arduous professional service expenses and poorly
constructed systems may consume any potential returns.
From a Tight Spot to a Sweet Spot
The invitation to seek help from a customer service representative
dramatically increases call center and email loads, which in turn threatens
the quality of service -- customer inquiries can jump by as much as 300%
after a company takes its business online. Even traditional offline businesses
find that customers expect to find help 24 hours a day, preferably online.
Customer relationship management can be approached through a variety of
traditional channels including telephone calls, emails website interaction.
While complete, multichannel, integrated, robust solutions are critical,
considering the cost of each method, purchasers of CRM packages are finding
that applications which include leading Web-based self-service are the ROI
"sweet spot" in the CRM market space.
Considering that, according to Forrester Research, providing service via the
telephone costs $33 per incident and answering email costs $10, web self-
service is a bargain at $1/incident. The following table shows Forrester's
industry estimates for several different channels.
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© 2001 RightNow Technologies, Inc.

5. CRM Channel Average Cost per Transaction
Telephone $32.74
Knowledge base self-service $1.17
E-mail $9.99
Message board $4.57
Chat $7.80
Because customers typically have the same questions, the Web can draw
from a central repository of information - called a knowledge base - to
provide immediate solutions. Thousands of inquiries can be answered at the
same time using a knowledge base.
The most effective knowledge bases are "self-learning" and "self-
maintaining". They use customer interactions to automatically create the
knowledge base. This means information truly relevant to a customer ends
up in the knowledge base.
According to the Patricia Seybold Group, - a worldwide strategic business and
technology consulting and research firm "the ability to find, research and buy
what they want, when they (customers) want, the way they want is one of
the primary reasons they choose to do business online. They want to be able
to help themselves to information, find solutions to problems, and navigate
through the decision and purchase process easily, at their own pace, and
without distraction."
Self-Service Index Documents Results
Doculabs, an independent analyst firm based in Chicago, recently issued a
report showing that companies are saving millions of dollars every quarter
using Web-based self-service solutions.
The Doculabs Self-service Index, which published results from more than 3
million service requests in the first quarter of 2001, showed that 86.9
percent of customer inquiries were handled through automated self-service
without the need for escalation to more expensive telephone calls or emails.
This data, from more than 200 companies across 22 industries showed a
Web-based self-service solution allowed these companies to realize
cumulative first quarter savings of more than $100 million.
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© 2001 RightNow Technologies, Inc.

6. The following is a sample from the Doculabs Self-Service Index for the first
quarter of 2001:
Industry Customer Visits Escalation Self-Service Index
Manufacturing 22,784 489 97.85%
Education 8,400 317 96.23%
Financial Services 40,574 1,972 95.14%
Computer Software 449,402 27,412 93.90%
Consumer Products 1,044,199 162,219 84.46%
Telecommunications 809,320 202,158 70.02%
Customer self-service is the primary opportunity in electronic commerce,
according the Patricia Seybold Group. Growth and success will be measured
by how well corporations can respond to change and exploit new
opportunities to attract and retain customers.
Get More R for Your I
Projecting an ROI for CRM software is complicated. The factors to consider
when calculating ROI go far beyond just the price tag. Crucial factors also
include:
Email and phone call reduction: Email and phone calls are expensive.
The more customer service interactions that can take place on the web, the
more money can be saved.
For example, Ping, a leading manufacturer of golf equipment, implemented a
Web-based self-service solution to better manage consumer email. Prior to
installation, customer support representatives were personally responding to
1,500 to 4,000 emails per month. Many of the inquiries dealt with the same
questions, which meant human and financial resources were not being used
very cost effectively. With customers able to find just the right answer 24/7
through self-service, inbound email dropped by about 50 percent. With
traditional email management costing about $10 per incident and self-service
only about $1, PING immediately realized a return on their CRM investment.
Professional Services: Frequently, professional services needed to set a
CRM system can be 50 percent of the price of the software. RightNow
Technologies, for example, was recently compared with competitors in a first
quarter audit. Only 9.9 percent of RNT's revenue was made on services after
product installation. Oracle's service revenue was 57 percent, followed by
Siebel at 43 percent, e.Piphany at 40.9 percent and Kana at 50.9 percent.
Obviously, the more integrated the software, the more easily it can be
implemented. Be wary of CRM vendors who have purchased other
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© 2001 RightNow Technologies, Inc.

7. technologies to combine with their own. The combinations are rarely
seamless.
Installation: Time is truly money. The longer it takes to set up a web
customer service solution, the more money is wasted. Ask the CRM vendors
you're considering how long it takes to install their software.
Scalability: Will the solution meet your needs six months from now? Two
years from now? Reinvesting in new products is expensive. Choosing one
that can grow with your business is much smarter.
Training: Consider whether new employees will be able to use the CRM
system immediately or if there is a steep learning curve. Using a well-
designed knowledge base also cuts ongoing training costs since answers to
the most common customer questions are very easily accessible.
Efficiency: If employees are not answering redundant questions, they
have time to solve more complex problems. Consider how much more
efficiently a support operation could run if only new questions needed to be
addressed.
Conclusion
The imperative of customer retention and loyalty, in tandem with an
increased emphasis on cost reductions and the bottom line in the current
economic environment, puts rapid ROI into sharp focus. Although there are a
number of technologies that can be deployed when creating a CRM system,
the one that can produce the greatest cost saving is Web self-service.
Advanced Web-based self-service solutions can be deployed in just a few
days, are self-contained and easy to use, and are scalable to meet increasing
demand. For many companies, the return on investment is realized in a
matter of weeks or months as customers rely more on extracting information
from self-service applications rather than making email or telephone contact
with a CSR.
Internet visitors who can easily find their own answers immediately online
are the happiest. This translates into lower support loads and improved
customer loyalty. With the cost savings of self-service, even small shifts can
translate into higher profitability.
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© 2001 RightNow Technologies, Inc.

8. About the Author
Susan is a 15-year veteran of corporate financial management. She joined
RightNow in 1999 following 4-1/2 years at Powerhouse Technologies, a $200
million publicly traded diversified gaming technology company. At
Powerhouse, Susan held various positions in finance and audit, advancing to
chief financial officer in 1997. She was a key player in the organization's
financial turnaround, culminating in the 1999 sale of the company. Susan's
earlier experience includes 3 years in financial positions with Martin Marietta
Astronautics Group and 6 years with Ernst & Young.
About RightNow Technologies
RightNow Technologies is a leading global provider of proven eService
solutions that deliver rapid time-to-benefit and quick ROI. RightNow was
named the second fastest-growing independent software company in the
U.S. by Softletter, an industry newsletter. RightNow’s comprehensive
solutions include Web-based self-service, email response management, live
chat and collaboration, and service analytics. These solutions feature an
integrated product architecture, highly intuitive interfaces, and centralized
workflow management – all based on a proprietary customer-driven, self-
learning knowledge base.
RightNow customers include Air Canada, Ben & Jerry’s, Black & Decker,
British Airways, Fijitsu, Motorola, Nortel, Sanyo, Social Security
Administration, Sprint, and more than 1,100 other organizations in a wide
range of vertical markets.
Founded in 1995, RightNow has offices in Bozeman, Dallas, London, Sydney,
and Tokyo. RightNow’s products are available in 15 languages worldwide.
To learn more, visit www.rightnow.com or call 877-363-5678 or 406-522-4200.
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© 2001 RightNow Technologies, Inc.